James E. Carroll, Jr. v. Isle of Palms Pest Control, Inc. ( 2023 )

THE STATE OF SOUTH CAROLINA
In The Court of Appeals
James E. Carroll, Jr., Appellant,
v.
Isle of Palms Pest Control, Inc., SPM Management
Company, Inc. and Terminix Service, Inc., Defendants,
Of which Isle of Palms Pest Control, Inc. and SPM
Management Company, Inc. are Respondents.
Appellate Case No. 2019-000797
Appeal From Charleston County
Roger M. Young, Sr., Circuit Court Judge
Opinion No. 6011
Heard June 16, 2022 – Filed August 9, 2023
AFFIRMED
Robert T. Lyles, Jr., of Lyles & Associates, LLC, and
Jody Vann McKnight, of McKnight Law Firm, both of
Mount Pleasant; and Rose Beth Grossman Smith, of
Greenville, all for Appellant.
Trent M. Kernodle and Stephen Michael Kozick, both of
Kernodle Coleman, of James Island, for Respondent Isle
of Palms Pest Control, Inc.; Robert Michael Ethridge, of
Ethridge Law Group, LLC, and Mary Skahan Willis,
both of Mount Pleasant, for Respondent SPM
Management Company, Inc.
VINSON, J.: In this civil action, James E. Carroll, Jr. appeals the circuit court's
order granting partial summary judgment in favor of Isle of Palms Pest Control,
Inc. (IOP) and SPM Management Company, Inc. (SPM) (collectively,
Respondents). Carroll argues the circuit court erred in granting partial summary
judgment in favor of Respondents as to his negligence claims when (1) the circuit
court incorrectly held the economic loss rule applied; (2) Respondents owed
Carroll duties created by the South Carolina Department of Pesticide Regulations
(SCDPR) and industry standards that were separate and distinct from the contract;
(3) the circuit court incorrectly limited Carroll's contractual remedy to $250,000;
(4) by limiting Carroll's claims to breach of contract, the circuit court nullified the
regulatory mandate requiring pest control applicators to carry insurance for the
protection of homeowners because breach of contract claims are excluded from
coverage; and (5) the circuit court's findings of fact and conclusions of law in its
order denying his motion to reconsider were false and pretextual. We affirm.
FACTS AND PROCEDURAL HISTORY
This action arises from an alleged termite infestation and resulting damage to
Carroll's residence. Carroll purchased 11 Tabby Lane on Isle of Palms (the
Property) in November 2002. In February 2003, Carroll entered into a termite
treatment and repair bond agreement (the Termite Contract) with IOP, a company
owned and operated by Vincent Sottile. According to its terms, IOP was to treat
the Property for subterranean termites, reinspect annually for infestations, and
apply any necessary additional treatments, provided Carroll paid the annual
reinspection fee of $250. Respondents agree that although Carroll did not sign the
Termite Contract, it was a valid contract that remained in effect from February
2003 until the filing of this action. In June 2011, SPM was formed and took over
IOP's termite services at the Property under the Termite Contract. Thereafter, SPM
sold its assets to Terminix Services, Inc. (Terminix) in May 2013, and Terminix
assumed the termite services at the Property. According to Carroll, Terminix
inspected the Property in January 2014 and discovered "substantial live termites
and termite damage." Carroll claimed Terminix treated the Property at that time
and that in January 2015, Terminix again discovered and treated for live, active
termites when it performed its annual reinspection. Carroll hired professional
contractors to complete an inspection of the Property, and they discovered the
home was "inundated" with subterranean termites. Carroll claimed this
demonstrated the treatments were not effective and that Respondents and Terminix
were responsible for making repairs.
Carroll commenced this action against IOP, SPM, and Terminix 1 in November
2015 and filed a second amended complaint on July 27, 2016, asserting claims for
breach of contract and negligence based on the alleged termite infestation and
resulting damage to the Property. Carroll alleged IOP and SPM were negligent in
failing to (1) properly inspect, treat, or apply treatment to the Property; (2) discover
active termites in the Property; (3) train its employees regarding pest control
management; (4) comply with South Carolina law and regulations pertaining to
inspection for and treatment of termites; and (5) use the degree of care and caution
that a reasonable, similarly situated termite pest management company would use.
Carroll sought damages including the cost of repair to return the Property to its
prior condition or, alternatively, for the replacement of the structure and for the
diminished fair market value of the Property resulting from having to disclose
termite damage to future potential homebuyers.
SPM moved for partial summary judgment on February 5, 2019—fourteen days
before trial was scheduled to start—and argued it was entitled to summary
judgment as to Carroll's negligence claims because he failed to allege SPM owed
him any legal duties apart from those set forth in the Termite Contract and such
claims were therefore barred by the "economic loss rule." 2 In addition, SPM
argued it was entitled to summary judgment on the issue of damages and Carroll's
damages award was limited to $250,000 as set forth in the Termite Contract.
According to Carroll, he emailed a copy of his memorandum in opposition to
SPM's motion for partial summary judgment to the circuit court's law clerk and
opposing counsel on February 18, 2019—two days before the hearing. Carroll
included several exhibits with the memorandum, including excerpts of deposition
testimony from Sottile and Carroll's experts, Cecil Hernandez and Maxcy P. Nolan,
III. Carroll acknowledged, however, he did not file this submission until February
22, 2019, two days after the hearing.
1
Terminix is no longer party to this lawsuit.
2
See, e.g., Sapp v. Ford Motor Co., 386 S.C. 143, 147, 687 S.E.2d 47, 49 (2009)
("The economic loss rule is a creation of the modern law of products liability.
Under the rule, there is no tort liability for a product defect if the damage suffered
by the plaintiff is only to the product itself. In other words, tort liability only lies
where there is damage done to other property or personal injury." (citation
omitted)).
In his memorandum, Carroll argued regulation 27-1083 3 required a termite
prevention company to maintain records for two years or the duration of the
contract, whichever is longer. In addition, he argued regulation 27-1085(D) 4
required all chemicals used on a property to be used according to label instructions
and documented with a special "Termiticide Disclosure Form." He stated that,
according to Sottile's deposition, Sottile "decided to stop monitoring and protecting
[the P]roperty with the Exterra Bait Stations[] and instead . . . applied Termidor
termiticide to the ground" sometime in 2008. Carroll stated Sottile testified he
"beaded" termiticide around the Property in 2003 but did not inform Carroll or "file
the appropriate 'Termiticide Disclosure Form.'"
Carroll argued the economic loss rule did not apply and he could sue in tort and
contract. He argued Hernandez's deposition testimony showed the use of
termiticide treatment did not meet industry standards and that Sottile's trial
testimony would show the treatment was not "an application according to labeled
instructions" in violation of the SCDPR regulations. Finally, Carroll argued he
was entitled to damages up to $250,000 under the contract for each year the
contract was violated.
3
See S.C. Code Ann. Regs. 27-1083(C)(3)(b) (2011) ("Records of pesticide
applications must be maintained by the company, firm, or licensed commercial or
noncommercial applicator as detailed below: . . . For post-construction
termite-control treatments, including the installation of bait systems and baits
containing active ingredients, records of termiticide application must be
maintained for a period of two (2) years from the date of application or as long as a
continuing warranty or contract exists, whichever is longer . . . .").
4
See S.C. Code Ann. Regs. 27-1085(D) (Supp. 2022) ("The chemicals, methods,
and systems permitted in the control of termites or other wood-destroying
organisms shall be only those pesticides which are registered in South Carolina for
that use. The chemical and control methods must be used in the proper proportions
and in the quantities and manner directed on the label or in these Standards."); see
also Regs. 27-1085(D)(6) ("All applications of termiticides, including
re-treatments and supplemental or 'booster' treatments, must be properly recorded
on the Record of Termiticide Use form published by [SCDPR] or in an alternative
manner acceptable to [SCDPR]. These record-keeping requirements for
termiticide applications apply to bait installations and wood-treatment methods as
well as to liquid termiticides. These records must be maintained by the firm as
specified in [regulation] 27-1083[(C)] above and must be presented to the Director
or his authorized representatives for review and duplication upon their request at
the expense of [SCDPR].").
The circuit court heard SPM's motion for partial summary judgment on February
20, 2019. During the hearing, IOP stated it joined in SPM's motion on the same
grounds. SPM argued the case Duc v. Orkin Exterminating Co., 5 in which the
South Carolina district court limited a plaintiff's claims to those available under
contract, supported its position as to Carroll's negligence claims. Carroll argued he
and IOP entered into an exterior bait station agreement and without telling Carroll,
IOP undertook a duty separate from the contract "of putting termiticide around the
home." He acknowledged "it was all related to . . . keeping termites out of the
[P]roperty" but argued "the agreement did not call for that." Carroll referenced
Sottile's deposition testimony during the hearing and stated Sottile "sa[id] he
beaded" the termiticide and that Carroll's experts—Hernandez, Nolan, and James
Wright—indicated in their depositions that such treatment was "not within the
standards." Carroll argued regulation 27-1085 required termiticide to be applied
"according to the label in the context in which it[ wa]s being done" and here it was
applied when there were no active termites. Carroll asserted IOP also failed to
comply with regulation 27-1083 because it applied the termiticide without
informing him or completing a Termiticide Disclosure Form. He maintained the
economic loss rule did not apply because the losses were more than merely
economic. Carroll argued he was entitled to $250,000 in damages for every year
the Termite Contract was renewed. He additionally argued, in general terms, that
insurance carriers did not provide coverage for breach of contract and this
essentially "le[ft] homeowners with no money ever" if they were forced to only
pursue contract remedies and were not permitted to sue for negligence.
At the conclusion of the hearing, the circuit court ruled in favor of Respondents.
The court ruled that based upon the record, Carroll failed to demonstrate any
negligent act that arose outside of the contract. The circuit court indicated its
record included the file, the exhibits, and the exhibits submitted with the
memorandum in opposition to partial summary judgment. Thereafter, the circuit
court issued a written order granting Respondents' motion for partial summary
judgment. Citing to Dixon v. Texas Co. 6 and Duc, the circuit court ruled Carroll's
remedy was for breach of contract because Respondents owed no duty distinct
from the contract. The circuit court noted it reviewed the record, including
5
729 F. Supp. 1533, 1535 (D.S.C. 1990).
6
222 S.C. 385, 389, 72 S.E.2d 897, 899 (1952) ("Ordinarily, where there is no duty
except such as the contract creates, the plaintiff's remedy is for breach of contract,
but when the breach of duty alleged arises out of a liability independently of the
personal obligation undertaken by contract, it is a tort.").
Carroll's second amended complaint and the "motions and memorandum of law
filed in support therewith." It then concluded Carroll's claims arose from the
Termite Contract and his negligence claim must be dismissed as a matter of law
because it was "barred by the economic loss rule."
Carroll filed a motion to reconsider. First, he argued the circuit court should
acknowledge its review and consideration of his memorandum in opposing partial
summary judgment, including exhibits. Second, he argued his claims for
negligence arose out of duties created by the SCDPR regulations, which were
separate and distinct from any duties owed under the contract. Specifically, he
argued a duty arose under regulation 27-1085(A), (B)(2), and (D). Next, Carroll
again argued the economic loss rule did not bar his negligence claims and his
contractual remedies amounted to $250,000 per year for every year the contract
was renewed. He additionally asserted Respondents' counsel admitted their
insurance policy did not contain liability insurance for breach of contract. Carroll
therefore contended that eliminating his tort claims would nullify the regulations
requiring pest control applicators to carry insurance for the protection of
homeowners and thus violated public policy. He attached several exhibits with his
motion to reconsider, including a complete transcript of Nolan's November 2016
deposition testimony; a complete transcript of Wright's deposition testimony,
including 140 pages of exhibits; a complete transcript of Sottile's deposition
testimony; a complete transcript of Hernandez's deposition testimony; and a copy
of his memorandum in opposition to the motion for partial summary judgment,
including exhibits.
The circuit court denied Carroll's motion to reconsider. The circuit court rejected
his request to consider his memorandum in opposing partial summary judgment
and attached exhibits because it was neither filed prior to the hearing nor provided
to the court at the hearing. It reasoned that pursuant to Rule 56(c), SCRCP, it had
discretion to make the documents part of the file only if it did not prejudice
Respondents. The circuit court concluded Respondents would "clearly be
prejudiced" if it amended its order to include the unfiled memorandum and
exhibits. In addition, the circuit court found Carroll attempted to raise the
following as new legal arguments in his motion to reconsider: (1) Respondents
owed duties created by the SCDPR and industry standards; (2) Respondents owed
duties created by SCDPR regulation 27-1085(A) and (B)(2), neither of which he
referenced in his memorandum in opposition; (3) the termite industry is a regulated
industry and therefore falls within the narrow exception to the economic loss rule
set forth in Kennedy 7; and (4) Respondents owed him duties arising from
regulatory and industry standards for application of termiticide separate and apart
from the contractual duties under the Termite Contract. The circuit court declined
to consider these arguments because Carroll failed to raise them during the hearing
on the motion for partial summary judgment. The circuit court further declined to
consider the additional exhibits because the exhibits Carroll attached to his
memorandum in opposition included only excerpts from Hernandez's, Nolan's, and
Sottile's depositions and did not reference Wright's deposition at all. The circuit
court concluded that even if it were to take such arguments and evidence into
consideration, it would still find Carroll's arguments were without merit. The
circuit court stated the Termite Contract governed the relationship between Carroll
and Respondents, Respondents agreed to inspect and treat the Property for termites
and repair any damages resulting from termites up to $250,000, and South Carolina
law did not recognize a tort duty under these circumstances. The circuit court
concluded the economic loss rule barred Carroll's tort claims and that the exception
in Kennedy did not apply because it was limited to residential housing
construction. This appeal followed.
ISSUES ON APPEAL
1. Did the circuit court err in finding Duc v. Orkin Exterminating Co. and the
economic loss rule applied to Carroll's negligence cause of action?
2. Did the circuit court err in granting Respondents' motion for partial summary
judgment as to Carroll's negligence claim when SCDPR regulations and industry
standards created a duty separate and distinct from duties owed under the contract?
3. Did the circuit court err in limiting the contractual remedy to $250,000 total,
rather than $250,000 per year for each year the contract was renewed?
4. Did the circuit court err in limiting Carroll's claims to breach of contract when
Respondents' insurance coverage excluded breach of contract from coverage?
7
Kennedy v. Columbia Lumber & Mfg. Co., 299 S.C. 335, 345-47, 384 S.E.2d 730,
736-37 (1989) (holding the economic loss rule does not prevent the imposition of
tort liability upon a residential homebuilder when the builder violates a legal duty
and that the "violation of a building code" or failure to "undertake construction
commensurate with industry standards" violates a builder's legal duty).
5. Should this court reject the findings and conclusions of the circuit court's order
denying reconsideration because they were false and pretextual?
STANDARD OF REVIEW
"When reviewing a grant of summary judgment, an appellate court applies the
same standard used by the trial court." Town of Summerville v. City of North
Charleston, 378 S.C. 107, 109, 662 S.E.2d 40, 41 (2008). "[S]ummary judgment is
proper when there is no genuine issue as to any material fact and the moving party
is entitled to judgment as a matter of law." Id. at 110, 662 S.E.2d at 41; see also
Rule 56(c), SCRCP ("[Summary judgment] shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment as a matter of law."). "In
determining whether any triable issues of fact exist for summary judgment
purposes, the evidence and all the inferences which can be reasonably drawn from
the evidence must be viewed in the light most favorable to the nonmoving party."
Law v. S.C. Dep't of Corr., 368 S.C. 424, 434, 629 S.E.2d 642, 648 (2006).
LAW AND ANALYSIS
A. Negligence Claims
Carroll argues the economic loss rule does not apply to his claims because the rule
precludes tort liability when a defective product causes injury to the product itself
and whether it applies to services is not settled law. He argues his claims arise
from Respondents' failure "to properly perform pest control services at the
Property" in conformance with industry standards and regulations. Citing to
Kennedy, Carroll further argues that when private parties contract in a "regulated
industry," and a party violates the applicable regulations in performing the
contract, the aggrieved party has a cause of action in tort. He contends that
pursuant to Kennedy, regulations and industry standards create legal duties and
Respondents were liable in tort because they violated these duties. Carroll
contends the circuit court erred in relying on Duc because it did not involve alleged
regulatory violations or allegations of other breaches of duties originating outside
of the contract. He additionally asserts the economic loss rule did not apply to his
claims because he sought damages for harm to the Property.
Carroll next argues that under regulation 27-1085(B)(2), 8 the breach of a contract
is "a dual regulatory violation." He contends "evidence of a regulatory violation is
evidence of negligence" and the duties arise out of both contract and regulation,
allowing him to maintain causes of action for negligence and breach of contract
pursuant to Kennedy. In addition, Carroll asserts that when Respondents applied
termiticide, they undertook duties pursuant to regulatory requirements and industry
standards for application of termiticide that were "separate and apart from the
contractual and regulatory duties inherent to the [Termite Contract]." He argues
the expert testimony of Wright, Nolan, and Hernandez created questions of fact as
to whether Respondents violated "pesticide application and operator regulations as
part of the contractual and extra-contractual activities in relation to the Property."
Carroll asserts regulation 27-1083 requires records of treatment or bait station
monitoring be kept for as long as the contract is in place and that Nolan testified
IOP violated the regulations by failing to document such treatment. Carroll argues
Wright testified Respondents violated the standard of care for termiticide use, bait
station use, and bait station monitoring. We disagree.
"The economic loss rule is a creation of the modern law of products liability."
Sapp, 386 S.C. at 147, 687 S.E.2d at 49. It provides "there is no tort liability for a
product defect if the damage suffered by the plaintiff is only to the product itself."
Id. "In other words, tort liability only lies where there is damage done to other
property or personal injury." Id. The purpose of this rule "is to define the line
between recovery in tort and recovery in contract." Id. "Contract law seeks to
protect the expectancy interests of the parties," whereas tort law "seeks to protect
safety interests and is rooted in the concept of protecting society as a whole from
physical harm to person or property." Id. "In most instances, a negligence action
will not lie when the parties are in privity of contract. When, however, there is a
special relationship between the alleged tortfeasor and the injured party not arising
in contract, the breach of that duty of care will support a tort action." Tommy L.
Griffin Plumbing & Heating Co. v. Jordan, Jones & Goulding, Inc., 320 S.C. 49,
55, 463 S.E.2d 85, 88 (1995).
In Kennedy, our supreme court established a narrow exception to the economic loss
rule in the context of residential home building and held the rule did not bar
recovery in tort when a builder violates an applicable building code or deviates
from industry standards. 299 S.C. at 347, 384 S.E.2d at 738; see also Sapp, 386
8
See S.C. Code Ann. Regs. 27-1085(B)(2) (Supp. 2022) ("Treatment and
inspection must be performed in accordance with these regulations and with the
terms of the written agreement or contract for as long as the contract is valid.").
S.C. at 148, 687 S.E.2d at 49 (explaining the court in Kennedy created a "narrow
exception to the economic loss rule to apply solely in the residential home
[building] context"). The court explained, "If a builder performs construction in
such a way that he violates a contractual duty only, then his liability is only
contractual," but "[i]f he acts in a way as to violate a legal duty . . . his liability is
both in contract and in tort." Kennedy, 299 S.C. at 346, 384 S.E.2d at 737.
In Tommy L. Griffin Plumbing & Heating Co., our supreme court held design
professionals were not insulated from liability "when the relationship between the
design professional and the plaintiff [wa]s such that the design professional owe[d]
a professional duty to the plaintiff arising separate and distinct from any
contractual duties between the parties." 320 S.C. at 55, 463 S.E.2d at 89
(emphasis added). The court explained,
In our view, the Kennedy application of the 'economic
loss' rule maintains the dividing line between tort and
contract while recognizing the realities of modern tort
law. . . . [T]he question of whether [a] plaintiff may
maintain an action in tort for purely economic loss turns
on the determination of the source of the duty [the]
plaintiff claims the defendant owed. A breach of a duty
which arises under the provisions of a contract between
the parties must be redressed under contract, and a tort
action will not lie. A breach of a duty arising
independently of any contract duties between the parties,
however, may support a tort action.
Id. at 54-55, 463 S.E.2d at 88 (footnote omitted).
In Koontz v. Thomas, this court applied the economic loss rule to plaintiff's
professional negligence claim against an architectural firm and upheld the circuit
court's conclusion that the rule barred such claims because "the alleged breaches of
duty in th[at] case [we]re contractual in nature." 333 S.C. 702, 712, 511 S.E.2d
407, 412 (Ct. App. 1999). We noted, "Our inquiry . . . is whether the duties
[plaintiff] allege[d] . . . ar[o]se from the parties' contract or independently
therefrom." Id.Neither Dixon nor Duc specifically reference the economic loss rule, but in both
cases, the court found the plaintiff was not entitled to bring tort claims when his
allegations arose out of the performance or nonperformance of a contract. In
Dixon, our supreme court concluded the plaintiff could bring an action only for
breach of contract because "[t]he breach of duty complained of ar[ose] solely from
contract and constitute[d] nonfeasance rather than misfeasance." 222 S.C. at 390,
72 S.E.2d at 899. The court stated, "Ordinarily, whe[n] there is no duty except
such as the contract creates, the plaintiff's remedy is for breach of contract, but
when the breach of duty alleged arises out of a liability independently of the
personal obligation undertaken by contract, it is a tort." Id. at 389, 72 S.E.2d at
899. In Duc, the United States District Court granted summary judgment as to the
plaintiff's allegations of negligence, holding the plaintiff could not recover on his
negligence cause of action because the defendant owed him "no legal duties
independent of the contract." 729 F. Supp. at 1535. The court stated, "South
Carolina courts have recognized the distinction between contract and tort causes of
action and have held that in order for a plaintiff to state a claim in tort, he must
allege a duty owed him by the defendant separate and distinct from any duty owed
under a contract." Id. In granting summary judgment, the court reasoned that the
contract created and defined the duties and liabilities of the parties and that the
plaintiff "alleged no breach of duty by [the defendant] that [wa]s independent of
the contract." Id.We hold the circuit court did not err in granting partial summary judgment in favor
of Respondents on the ground that Carroll failed to identify a duty Respondents
owed to him outside of the contract. Here, the Termite Contract defined the duties
and liabilities of the parties. Respondents' duty under the contract was to treat,
reinspect, and control for termite activity. Carroll alleged that as a result of
Respondents' failure to properly inspect and treat for termites, termite activity
occurred and caused damage to the Property, which he seeks to repair. He
acknowledged during the summary judgment hearing that Respondents' actions "all
related to . . . keeping termites out of the [P]roperty." The contract therefore
provided for the precise damage that occurred. Even assuming Respondents'
failure to adequately perform pest control services violated regulations and
industry standards, all of these acts relate to the duties Respondents' owed Carroll
under the contract. Thus, such claims do not give rise to legal duties owed outside
of the contract. Because Respondents' duties arise solely from contract, we hold
the circuit court did not err in concluding Carroll was barred from pursing
negligence claims against Respondents. Further, Carroll's allegations pertain to a
contract to perform termite services and do not involve residential home building.
Thus, we hold the exception to the economic loss rule set forth in Kennedy does
not apply. See Sapp, 386 S.C. at 148, 687 S.E.2d at 49 (explaining the court in
Kennedy created a "narrow exception to the economic loss rule to apply solely in
the residential home [building] context" (emphasis added)); see also Kennedy, 299
S.C. at 347, 384 S.E.2d at 737 ("The 'economic loss' rule will still apply where
duties are created solely by contract. In that situation, no cause of action in
negligence will lie." (footnote omitted)). Based upon the foregoing, we affirm the
circuit court's grant of partial summary judgment as to Carroll's negligence claims
because he failed to identify a legal duty separate and distinct from Respondents'
contractual duty under the Termite Contract. 9
B. Limitation of Remedy to $250,000
Carroll argues each annual renewal of the contract entitled him to $250,000 for
each year that Respondents were in breach of the contact.
Carroll has cited no legal authority to support this argument. We therefore find
this issue is abandoned. See Mulherin-Howell v. Cobb, 362 S.C. 588, 600, 608
S.E.2d 587, 594 (Ct. App. 2005) (noting the appellant abandoned issues on appeal
and this court need not consider them when the appellant failed to cite any
supporting authority for its position and its arguments were merely conclusory
statements).
C. Exclusion from Coverage
Finally, Carroll argues SCDPR regulations require pest control companies to carry
liability insurance and limiting his remedy to breach of contract would nullify this
regulation. He contends that during an off-the-record discussion in chambers,
Respondents' counsel informed the circuit court that Respondents' policies
contained an exclusion for contractual liability. Carroll asks this court to take
judicial notice that policy forms for commercial general liability insurance
coverage "are generally alike, as evidenced by the exclusionary language in both
[Respondents'] policies." He argues this provides another basis for allowing a
cause of action in tort in this context.
9
Carroll asserts the issue of whether the economic loss rule applies to contracts for
services remains unsettled law. We find this argument is not preserved for our
review. See Herron v. Century BMW, 395 S.C. 461, 465, 719 S.E.2d 640, 642
(2011) ("At a minimum, issue preservation requires that an issue be raised to and
ruled upon by the trial judge."); cf. Eaton Corp. v. Trane Carolina Plains, 350
F. Supp. 2d 699, 703 (D.S.C. 2004) (noting "the contours of the doctrine remain far
from clear").
We find these arguments are not preserved for appellate review. See Elam v. S.C.
Dep't of Transp., 361 S.C. 9, 23, 602 S.E.2d 772, 779-80 (2004) ("Issues and
arguments are preserved for appellate review only when they are raised to and
ruled on by the lower court."); see also Johnson v. Sonoco Prods. Co., 381 S.C.
172, 177, 672 S.E.2d 567, 570 (2009) ("An issue may not be raised for the first
time in a motion to reconsider."). During the hearing on the motion for partial
summary judgment, Carroll argued, in general terms, that insurance carriers do not
provide coverage for breach of contract, leaving homeowners no remedy if they are
unable to pursue negligence claims. However, Carroll provided no evidentiary
support or legal authority for this argument prior to, or during, the summary
judgment hearing. See Loyd's Inc. by Richardson Constr. Co. of Columbia, S.C. v.
Good, 306 S.C. 450, 453, 412 S.E.2d 441, 443 (Ct. App. 1991) ("[Rule] 56(c)
requires summary judgment motions and, inferentially, supporting materials to be
on file when they are to be relied upon at a summary judgment motion hearing.").
Further, Carroll acknowledged the discussion regarding liability coverage occurred
off the record. See York v. Conway Ford, Inc., 325 S.C. 170, 173, 480 S.E.2d 726,
728 (1997) ("An objection made during an off-the-record conference which is not
made part of the record does not preserve the question for review. "). We hold this
was insufficient to raise the issue to the circuit court at the summary judgment
phase. Rather, Carroll argued Respondents' insurance policies contravened
SCDPR regulations for the first time in his motion to reconsider. Accordingly, we
hold Carroll failed to preserve these arguments for appellate review. See Peterson
v. Porter, 389 S.C. 148, 152, 697 S.E.2d 656, 658 (Ct. App. 2010) (finding an
issue was not preserved for appellate review when the appellant raised the
argument in a motion to reconsider but failed to raise it during the summary
judgment proceedings).
D. Motion to Reconsider
Carroll asserts this court should "reject the findings and conclusions" in the circuit
court's order denying his motion to reconsider because they were "false and
pretextual." Carroll contends that although the circuit court failed to mention the
memorandum or exhibits in its order granting the motion for partial summary
judgment, this court must consider these submissions part of the record because the
circuit court incorporated them into the record during the hearing.
To the extent Carroll argues the circuit court erred in refusing to consider his
memorandum opposing the motion for partial summary judgment and attached
exhibits and in declining to consider evidence Carroll presented for the first time
with his motion to reconsider, we find these arguments are without merit because
the circuit court acted within its discretion. See Rule 56(c), SCRCP (providing a
motion for summary judgment "shall be served at least [ten] days before the time
fixed for the hearing," and "[t]he adverse party may serve opposing affidavits not
later than two days before the hearing"); Loyd's Inc., 306 S.C. at 453, 412 S.E.2d at
443 ("[Rule] 56(c) requires summary judgment motions and, inferentially,
supporting materials to be on file when they are to be relied upon at a summary
judgment motion hearing. To be on file, we hold they ordinarily must have been
filed." (emphasis added); id. ("However, . . . whe[n] the court file is in the physical
custody of the trial judge we hold she ha[s] the discretion and the inherent power to
receive the documents and make them a part of the file provided their receipt did
not prejudice [the defendant]."); see also First Union Nat'l Bank of S.C. v. Hitman,
Inc., 308 S.C. 421, 422, 418 S.E.2d 545, 545 (1992) ("[A] judge is not bound by
[a] prior oral ruling and may issue a written order which is in conflict with the oral
ruling."); Johnson, 381 S.C. at 177, 672 S.E.2d at 570 ("An issue may not be raised
for the first time in a motion to reconsider.").
Regardless, we have considered Carroll's memorandum and exhibits. Even
considering these submissions, we hold the circuit court did not err in granting the
motion for partial summary judgment. See Town of Summerville, 378 S.C. at 110,
662 S.E.2d at 41 ("[S]ummary judgment is proper when there is no genuine issue
as to any material fact and the moving party is entitled to judgment as a matter of
law."). Viewing this evidence in the light most favorable to Carroll, we find none
of this evidence established the existence of a duty owed by Respondents to Carroll
that was separate and apart from the contract. Rather, the testimony Carroll relies
upon pertained to Respondents' failure to perform according to the terms of the
Termite Contract. As to the expert testimony regarding the application of
termiticide and the violation of regulations and industry standards, this testimony
also relates to Respondents' conduct with respect to its duties under the Termite
Contract. Thus, we hold the circuit court did not err in finding the evidence did not
establish the existence of a duty owed to Carroll that was separate and distinct
from the contract.
CONCLUSION
Based on the foregoing, the circuit court's order granting partial summary
judgment in favor of Respondents is
AFFIRMED.
WILLIAMS, C.J., and KONDUROS, J., concur.